The Financial Conduct Authority is launching a study into the £1trn UK cash savings market as part of a competition review and is considering whether to carry out a review into competition in the annuities market.
The cash savings study will look at a range of issues including the effects of “teaser rates”, the introductory interest rates offered to new customers, and account switching.
The regulator says it will look at whether a market study into competition in the annuities market is needed towards the end of the year.
The study will be part of a programme of work where the FCA will look across financial services markets and assess whether or not competition is working effectively in the best interests of consumers.
The FCA says market studies enable it to examine competition in a market, assessing how consumers and firms behave and interact. It will call for evidence on competition between financial services firms early next year.
The FCA was handed a duty to promote competition in financial services when it came into force in April.
FCA chief executive Martin Wheatley says: “In looking at cash savings, we will examine an area that affects most people and see if there is action we need to take. This is exactly the sort of area I want the FCA to be operating in.”
Bloomsbury Wealth Management partner Jason Butler says: “There is a market failure in savings which is exacerbated by low rates and poor financial literacy so it is right to look at it. On annuities, the important thing is to raise awareness about shopping around so if the FCA can do it then it would be great.”